Aug. 19 (Bloomberg) -- Montreal, Maine & Atlantic Railway Ltd. Chairman Ed Burkhardt said he expects the company, whose runaway oil train exploded and killed 47 people in Quebec last month, to win a judge’s approval to keep operating after tomorrow.
Lawyers for the railroad will ask a Quebec bankruptcy judge to “put a charge” on the assets of the company’s Canadian unit, “which would in effect reserve some of the results of an asset sale for people that would be creditors under the deductible amount of an insurance claim,” Burkhardt said today in a telephone interview.
The Canadian Transportation Agency on Aug. 16 conditionally agreed to extend Montreal, Maine & Atlantic’s so-called certificate of fitness to Oct. 1, provided the railroad gets enough funds to pay for the self-insured portion of its insurance coverage. Regulators on Aug. 13 ruled the railroad would stop operating as of Aug. 20 because it lacked sufficient liability coverage in the wake of the disaster in Lac-Megantic.
Burkhardt said he would shut down the railroad “rather quickly” if the judge denies the company’s request to keep operating. Gaining approval will give Montreal, Maine & Atlantic time to make alternative arrangements, he said.
“I am hoping that he will approve of that,” Burkhardt said. “I think he will, but I am not sure because he is a judge.”
Montreal, Maine & Atlantic filed for bankruptcy protection in Canada and the U.S. Aug. 7 because of potential liability from the accident, Canada’s worst rail disaster since 1910. A criminal probe by Quebec authorities is under way, the town of Lac-Megantic is seeking financial aid to restore the gutted community and a civil complaint alleges a failure to take steps to prevent the derailment.
Revenue has plummeted to about $1 million a month from $3 million before the catastrophe, Chief Financial officer Donald Gardner said Aug. 6 in an affidavit that was part of the company’s U.S. bankruptcy filing.
Montreal, Maine & Atlantic now has about 65 employees, Burkhardt said. That’s down from the 179 that the company had at the time the crash.
--Editors: James Callan, John Lear